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German Auto Sector Can Decline By 12% If Trump Declares Tariffs

As per to analyst, Germany’s automotive sector can decline by 12% over “three poor trading days,” if US President Donald Trump enforces tariffs on European car producers. Trump has just a few days to decide whether to inflict duties on car imports. This will possibly impact Germany—which is the EU’s (European Union) traditional development engine—considering that it is one of the biggest direct car suppliers to the U.S. According to Christoph Schon—Executive Director of Axioma—the German stock market can decline by 6% and its components and automobile sector, particularly, can see loss of at least 12%. He further told CNBC that the losses can occur in a period of trading 3 Days, or in 5–10 sessions.

Reportedly, Germany’s DAX so far is elevated by almost 14% in this year, whereas the entire European auto sector is high by around 11% in this year. Daimler and Volkswagen are up by almost 15% and 7%, respectively. Trump intimidated to entail 20% tariffs on European cars in 2018, arguing there is a trade inequity threatening the US’ national security. The EU is the biggest supplier of motor vehicles across the globe, while the U.S. is the biggest importer.

Recently, Volkswagen was in news for investing more than $1 Billion on a battery manufacturing plant in Germany. Herbert Diess—Chief Executive Officer of Volkswagen—stated that the factory is a part of the company’s attempt to electrify its vehicles. He asserted the plant would be constructed in the northern city of Salzgitter that is quick access to huge wind power plants in the region. Reportedly, Volkswagen is trying to shift from the diesel emissions scandal that has so far charged the company 30 Billion euros. The statement came after rival Daimler declared that it expects to make all of the passenger cars carbon-neutral by the end of 2039.